The rental market has experienced mixed results over the last quarter, with rents falling in many of the nation’s capitals, according to the June Domain Rental Report.
Tenants in Adelaide and Brisbane felt the relief of decreased rents, while prices in Perth and Darwin continued a steep decline brought on by the mining sector downturn.
Canberra tenants are feeling the pinch of increased house rents and Sydney’s unit rental prices continued to rise, quickly closing in on house rental prices.
Despite easing conditions for tenants in many capital cities, the underlying demand for rental accommodation still remains ahead of supply.
Fewer investors have intensified property shortages, while low numbers of first home buyers and migration have fuelled a rising demand for rentals.
The resource capitals of Perth and Darwin are the clear exceptions, with the continuing downturn in the mining economy slackening demand and causing rents to fall.
Sydney tenants experienced another sharp rise in unit rents in the June quarter.
Median unit rents increased from $520 to $525 per week, now only $5 less than median house rents, which remained steady at $530 per week.
Sydney unit rents have now increased by 5 percent over the past year – second to Hobart for annual growth.
Sydney house rents have also increased 1 per cent in the past 12 months.
Vacancy rates have eased slightly to 2.3 per cent for units and 1.9 per cent for houses.
Despite record new apartment building, Sydney unit rents continue to rise and are, remarkably, closing in on house rents
. House vacancy rates remain tight but, thankfully for Sydney tenants, unit vacancy rates are beginning to ease.
After last quarter’s staggering increase Melbourne median rents have now steadied, remaining at the record level of $380 for units and $400 for houses.
The Melbourne property market has had a solid year of growth, with unit rents increasing by 2.7 per cent and house rents by 2.6 per cent over the past 12 months.
Vacancy rates have increased to 2.7 per cent for units and 1.7 per cent for houses, this quarter.
Melbourne rents hit record levels last quarter and local tenants have felt the pressure.
Now, with new rentals on the market, unit vacancy rates are easing, hinting that relief is on the horizon.
Brisbane rents hit a record high in the last quarter, but it’s good news for local tenants as median rents decreased from $380 to $375 per week for units and $410 to $400 per week for houses.
A rise in vacancy rates suggests that prices could continue to fall.
Overall, house rents in the Brisbane Property Market have remained steady over the past year, with unit rents seeing a 1.4 per cent increase in the past 12 months.
Vacancy rates have eased, increasing to 2.6 per cent for houses and 3.3 per cent for units.
Brisbane tenants are seeing a welcome fall in unit and house rents.
The good news for local tenants continues as a significant number of new units on market look set to ease vacancy rates and rents further.
Adelaide rental prices decreased this quarter, with median rents for units falling to $285 per week.
House rental prices are also down, at $355 per week. It’s been a year of mixed results for Adelaide, with house rents growing by 1.4 per cent and unit rents down 1.7 per cent in the past 12 months.
Vacancy rates remain tight at 2.3 per cent for units and 1.8 per cent for houses.
This is the first fall in house rents for Adelaide in over two years.
Combined with the decrease in unit rental prices, the current market is a breath of fresh air for local tenants.
Perth rental prices fell yet again, with median unit rents slumping to $335 per week and house rents now down to $390 per week — the lowest point in over 5 years.
The Perth rental market has taken a significant knock over the past year, with unit rents falling 10.7 per cent and house rents down by 9.3 per cent.
Vacancy rates in Perth are also the highest of all the state capitals at 4.8 per cent for units and 4.3 per cent for houses.
Unfortunately for investors, the downturn of the resources economy means that Perth rents are continuing to fall.
With vacancy rates climbing, there’s no sign of an end point any time soon.
Hobart median rents remained steady this quarter, maintaining the record levels reached in the March quarter at $285 per week for units and $350 per week for houses.
While rents remained unchanged over the June quarter, Hobart has recorded the fastest rate of rental growth out of all the capital cities, reporting a 5.6 per cent increase for units and a 6.1 per cent rise for houses, over the past year.
Vacancy rates tightened to 1.6 per cent for units and 0.6 per cent for houses.
After a strong year of growth, Hobart rents remain steady but at record levels.
While the city still lays claim to the most affordable prices, it also has the lowest vacancy rates for an Australian capital city, suggesting tenants may see increasing price pressure.
Darwin rents are at their lowest in more than five years, with unit rents falling to $440 per week and house rents down to $550 per week.
Darwin median rents have declined sharply over the year, with units falling by 12 per cent and houses by 8.3 per cent — the most significant decrease in the nation.
Consistent with the March quarter, house vacancy rates continued to tighten, now at 2.1 per cent. Unit vacancy rates increased to 4.4 per cent.
Darwin rents continue to fall at the fastest rate of any capital city. However, the tightening house vacancy rates could act to steady the recent declines.
Canberra median rents increased again this quarter, reaching $400 per week for units and $475 for houses.
The capital has experienced strong growth over the past year, with unit rents up by 3.2 per cent and houses up by 5.6 per cent.
Despite the increase of vacancy rates to 2.0 per cent for units and 1 per cent for houses, prompted by new rentals in the market, Canberra vacancy rates remain tight, suggesting rents could continue to rise in the near future.
It’s more bad news for Canberra tenants with rents steadily rising.
Although house vacancy rates remain low, the new crop of apartments in the city could be set to ease vacancy rates and give tenants welcome relief.
Vacancy rates remained tight in the majority of Australian capital cities.
However, the recent national apartment building boom encouraged a slight easing in many markets.
National vacancy rates for dwellings climbed from 2.4 per cent to 2.5 per cent in the June quarter, with house vacancy increasing to 2.3 per cent and unit vacancy rising to 2.7 per cent.
Perth and Darwin report the highest house vacancy rates of Australia’s capital cities, sitting at 4.3 per cent and 2.1 per cent, respectively.
Canberra and Hobart have the lowest vacancy rates, at 1 percent and 0.6 per cent.
Gross rental yields for investors remained steady in most capitals over the June quarter.
At 5.45 per cent, Hobart continues to steadily deliver the highest gross returns for houses. Sydney continues to have the lowest returns at 3.45 per cent.
Rental yields for units also steadied over the quarter with Hobart delivering the highest returns at 5.61 per cent.
Canberra also had notable returns at 5.58 per cent.
Sydney units yielded the lowest returns at 4.11 per cent.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.